The mechanisms regulating antigen-recognition, activation, cell cycle progression, proliferation, and differentiation of lymphocytes are key to the control of the cellular responses of the immune system. During the past year, we have examined the biochemical mechanisms through which receptor cross-linkage stimulates B cell activation. We have obtained evidence for regulation of signal transmission by protein kinase C. We have also shown that principal protein substrates of phosphorylation catalyzed by PKC in B lymphocytes are plasma membrane associated proteins several of which are also associated with cytoskeleton. In parallel with these studies, the functions of B cell stimulatory factor-1 (BSF-1), a critical co-factor in B cell stimulation, have been evaluated. BSF-1 has been purified to homogeneity, an N terminal amino acid sequence has been obtained, and a receptor-binding assay has been developed. Functional studies indicate that BSF-1 is active on B and T cells and on other cell types of hematopoietic lineage, including mast cells and erythroid and megakargocytic precursors. Finally, BSF-1 has been shown to play a critical role in IgE expression both in tissue culture and in animals.